Former Goldman Sachs President Cohn to Sell His Stake in ICBC

Gary Cohn, director of the National Economic Council, is also President Donald Trump’s top economic adviser. To reduce conflicts of interest and for compliance with federal ethics law, he is willing to sell his stake in Beijing-based Industrial and Commercial Bank of China, Ltd (ICBC) which happens to be the world’s largest bank regarding assets (around $3.5 trillion).

This is an interesting finding because the Trump Administration has placed China as the villain and a threat to economic growth in America.

Cohn owns almost 23.4 million shares of ICBC valued at over $15 million. This investment is part of a 2006 investment made by Goldman Sachs Group Inc., and its private equity funds. This gave them access to millions of Chinese customers. Goldman held its position in ICBC for seven years and sold off its last block of investment in it in 2013.

Aside from this divestment plan, Cohn also wants to let go of his 872,712 Goldman Sachs Stock worth more than $216 million as well as investments in 18 other publicly traded shares and funds managed by Goldman Sachs. These other investments hold a total value of $5.1 million based on March 16, 2017, closing prices. Cohn has at least $1.1 million positions in cigarette makers Philip Morris International Inc., and Reynolds American Inc. He also has holdings in Microsoft Corp., Facebook Inc., and Twitter, Inc. as well as 9,174 shares in Bank of America Corp.

Cohn will also be able to defer in paying any capital gains taxes from the sale of these shares. Government officials are allowed to defer payment of capital gains taxes as long as they reinvest the proceeds of the sale in any government-approved mutual fund or government securities.

Cohn served as President of Goldman Sachs for a decade and has a net worth of about $600 million. He was once considered to be the heir-apparent to Goldman Sachs CEO Lloyd Blankfein.

ICBC is expected to negotiate its lease at Trump Tower in Manhattan. It is Trump’s Tower largest office tenant. Ethics experts this arrangement is against the constitution because the bank is state-owned. The law also forbids U.S. government officials from accepting gifts and payments from governments.

Richard Painter who was an ethics lawyer during the administration of President George W. Bush said, “If we get into a big spat with China, it is obviously going to have an effect on that bank economically. There is no way you should be a senior adviser on an economic or military policy and have a big stake in a Chinese bank. That’s an invitation for trouble.”

When former Goldman chief executive Henry M. Paulson Jr. became treasury secretary in 2006, he also had to sell is ICBC position worth at least $25 million.

Donald Trump is set to meet China’s President, Xi Jinping next month where they will likely discuss trade policy as well as territorial rights disputes in the South China Sea.